I'm the coauthor of The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups. I’m also the coauthor of Unleashing the Killer App: Digital Strategies for Market Dominance (Harvard Business School Press, 1998) and Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years (Portfolio, 2008).
I cofounded and am the managing director of the Devil’s Advocate Group, a consultancy that helps business leaders design and stress test their innovation strategies.
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Much of the reporting about Google’s driverless car has mistakenly focused on its science-fiction feel. While the car is certainly cool—just watch the video below about a 95%-blind man running errands—the gee-whiz focus suggests that it is just a high-tech dalliance by a couple of brash young multibillionaires, Google founders Larry Page and Sergey Brin.

In fact, the driverless car has broad implications for society, for the economy and for individual businesses. Just in the U.S., the car puts up for grab some $2 trillion a year in revenueand even more market cap. It creates business opportunities that dwarf Google’s current search-based business and unleashes existential challenges to market leaders across numerous industries, including car makers, auto insurers, energy companies and others that share in car-related revenue.

Because people consistently underestimate the implications of a change in technology—are you listening, Kodak, Blockbuster, Borders, Sears, etc.?—and because many industries face the kind of disruption that may beset the auto industry, I’m going to do a series of blogs on the ripple effects that the driverless car may create. I’m hoping both to dramatize the effects of a disruptive technology and to illustrate how to think about the dangers and the opportunities that one creates.

In this installment, I’ll start the series with a broad-brush look at the far-reaching changes that could occur from the driver’s standpoint. In the next installment, I’ll show just how far the ripples will reach for companies—not just car makers, but insurers, hospitals, parking lot operators and even governments and utilities. (Fines drop when every car obeys the law, and roads don’t need to be lit if cars can see in the dark).

After that, I’ll explore how real the prospects are for driverless cars. (Hint: The issue is when, not if—and when is sooner than you think.) In the last three installments, I’ll go into the strategic implications for Google, for car makers and, finally, for every company thinking about innovation in these fast-moving times.

To begin:

Driverless car technology has the very real potential to save millions from death and injury and eliminate hundreds of billions of dollars of costs. Google’s claims for the car, as described by Sebastian Thrun, its lead developer, are:

We can reduce traffic accidents by 90%.

We can reduce wasted commute time and energy by 90%.

We can reduce the number of cars by 90%.

To put those claims in context:

About 5.5 million motor vehicle accidents occurred in 2009 in the U.S., involving 9.5 million vehicles. These accidents killed 33,808 people and injured more than 2.2 million others, 240,000 of whom had to be hospitalized.

Adding up all costs related to accidents—including medical costs, property damage, loss of productivity, legal costs, travel delays and pain and lost quality of life—the American Automobile Association studied crash data in the 99 largest U.S. urban areas and estimated the total costs to be $299.5 billion. Adjusting those numbers to cover the entire country suggests annual costs of about $450 billion.

Now take 90% off these numbers. Google is claiming its car could save almost 30,000 lives each year on U.S. highways and prevent nearly 2 million additional injuries. Google claims it can reduce accident-related expenses by at least $400 billion a year in the U.S. Even if Google is way off—and I don’t believe it is—the improvement in safety will be startling.

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The average age of vehicles in the US is approximately 11 years (http://finance.yahoo.com/news/america-sets-record-old-cars-140754018.html).

Also note that Washington DC in their Autonomous Vehicle Bill are proposing that “(b) The conversion of vehicles into autonomous vehicles shall be limited to model years 2009 and later or vehicles built within 4 years of conversion, whichever vehicle is newer. ” http://dcclims1.dccouncil.us/images/00001/20121210175201.pdf Thus it is clear that a considerable proportion of aged vehicles would be included as possible to retro-fit this tech.

Finally, the fact that politicians have been so heavily involved in this subject already, as witnessed by law being passed in Nevada, Florida and California and being considered in other jurisdictions (http://cyberlaw.stanford.edu/wiki/index.php/Automated_Driving:_Legislative_and_Regulatory_Action) suggests that there is considerable political support. Watch Governor Jerry Brown of California at the California Bill signing: http://www.youtube.com/watch?v=XNhyt107c88

Well the rules haven’t be written yet in CA, but the bill does require a licensed driver behind the wheel at all times. What you’ll see here, under this bill, are varieties of smart “cruise control” and features like automated assist for parallel parking. It’ll get smarter over time, but taking the driver out of the driver’s seat is just not foreseen.

I am very interested in the possibilities of the driverless car. Instead of thinking about it as a means of transportation, I think about it as being the robot that we all want. Sure it can drive you to work everyday, take you to the movies but what about fetching things for you. Send the car to pick up pizza, groceries, starbucks while you sit at work or home. Send the car to pick up the kids from schools and then picks you up from work so you can all go to dinner. Once you start thinking about how this new “robot” can improve your life, think about how a company can change with the use of these “robots”. No more, pizza delivery guys, no more taxi drivers, etc. What about a company like UPS, how about scheduling a delivery to wherever you are at any given time, 24 hr delivery.. 10:00pm, UPS doesn’t care, they are not paying a driver overtime to work late. Then I think about all the smarter people them me who will think of inventive ways to use this tech and I see a new “internet type” revolution coming.

I think the driverless vehicle shifts several pardigms and opens many opportunties. In my opinion, the deployment can take place in phases. Phase 1 can be fix problems such as parking constraints, congestion, accidents where the application can increase convinience, reduce costs and not take away flexibility. Phase 2 can be improve lifestyle in certain environments and phase 3 begin to obsolete transportation as we see it today. If we can have Airforce with drones, why not have driverless roads. Of course our learning and adaption cycles are becoming much faster with technologies,so driverless cars can go viral real fast!!

Finally!! A report on the HUGE impact this invention will make – because it WILL happen. The barriers that exists is the transition, and how it will be managed, and liability issues, though I think a national single-payer system would be best for driverless cars.

Never thought of autonomous and semiautonomous cars in this way. Thanks for this!

You will probably also be interested in GM’s semiautonomous work. This video probably best shows how people will react when a car drives itself, wanting to take control. GM’s test video shows highway speeds which is quite cool, especially as it can handle fools cutting you off.

If we can save lives and time I’m even more for this type of technology.

http://www.youtube.com/watch?v=m2DFiERmKug

But I do believe fully autonomous will take a while to be accepted. And I don’t see any of us wanting to be in an autonomous car driving in the dark. I think it would be too off-putting. And I would always want to be able to override the computer, especially since I know so many of the people in the field coding and I don’t want to end up as a statistic courtesy of one of their bugs.

Autonomous vehicles have been researched by DARPA for over two decades. The lovely picture that you paint is likely possible, but has many caveats: for example, the claims about traffic reduction and so forth hold only if ALL cars are driverless: cars cooperating with each other to optimize their performance is a great thing; but until all cars are driverless, a lot of software and hardware will have to go into dealing with less rational drivers.

And who is going to insure these cars? Who is responsible if your car hits a pedestrian?

And, call me old fashioned, but I *like* driving. If I want to go driverless, I’ll take a bus or train.